India’s growing protectionism, reflected in its recent focus on building a self-reliant (atmanirbhar) economy, has not gone down well with the European Union which believes that the conditions are not yet there to engage in formal negotiations on the proposed India-EU free trade pact, according to EU officials.

“The conditions are not there yet to engage in formal negotiations (on a bilateral free trade pact). We have witnessed trends in India going on the protectionist side. First there was the ‘Make in India’ initiative. And now you have the recent announcements on building a self-reliant economy in response to the Covid-19 crisis which did not go down well with EU countries,” the EU official said ahead of the India-EU Summit on Wednesday.

Prime Minister Narendra Modi will represent India at the summit, to be held via video-conference, while the EU will be represented by European Council President Charles Michel and European Commission President Ursula von der Leyen.

India had earlier expressed hopes that the long-pending India-EU free trade pact negotiations, formally called the Bilateral Trade & Investment Agreement (BTIA), which were suspended in 2013 over major differences on key market access issues, could be resumed following discussions at the India-EU Summit.

Problem areas

India’s refusal to give reasonable market access in the primary areas of wines and spirits and automobiles as well as services, coupled with its lack of enthusiasm in including commitments on government procurement and development issues such as labour and environment, are seen by the EU as major hurdles to re-start the BTIA negotiations.

A new high-level dialogue on trade and investment, to be headed by EU Trade Commissioner Phil Hogan and Commerce Minister Piyush Goyal, likely to be announced during India-EU Summit, will hopefully provide the political impetus to move forward on contentious issues, the official said.

The EU is not ready to accept India’s proposal for a ‘early harvest programme’, focussing on duty cuts on just a handful of items, preceding a BTIA. “The EU wants nothing less than a comprehensive agreement covering goods, services, investments, procurement etc,” the official said.

The need to discuss a bilateral investment agreement separately from the India-EU BTIA, will also be taken up by the EU at the summit as it wanted to make investments under a legal framework and was “taken aback’’ when India suspended all bilateral investment pacts with individual EU countries a few years ago.

Geopolitical relationships with countries such as China, Russia and the US will also be discussed by the two at the Summit as will the future and scope of bodies such as the World Trade Organisation and the UN Security Council.

The two partners will also discuss ways to strengthen cooperation to fight the pandemic and minimise the socio-economic fall-outs, the official said.

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